Monday, January 24

Collapse of developer actions; Country Garden Bonuses: Evergrande Update


Chinese real estate developers extended the falls on signs that debt stress is mounting in the beleaguered sector, with Country Garden Holdings Co. reportedly unable to find demand for a $ 300 million convertible bond.

Several of China’s largest banks have become more selective when it comes to financing real estate projects through local government financing vehicles, concerned that some are taking too much risk after they replaced private developers as key buyers of land, people familiar with the matter said.

A gauge of Chinese builders fell 4.5%, the highest since September, while Country Garden shares fell 7.8%. Shares in Sunac China Holdings Ltd. fell a record 23% after an additional $ 580 million share sale did little to restore confidence in the company’s long-term financial health. Some of China’s most stressed builders face a series of key payments this week in a test for the country’s volatile credit market.

Key developments:

  • Country Garden fails to meet the $ 300 million conv. Bonus: IFR
  • China’s banks restrict real estate loans to local government companies
  • Sunac bonds and shares fall after $ 580 million share offering
  • Shimao proposes to delay the full payment of 2 ABS until December
  • Investors have weighed in on China’s widespread property distress: AB
  • Short-sighted moves by China’s developers are failing: Shuli Ren
  • China’s real estate companies face a series of key payments this week (1)

Country Garden fails to meet the $ 300 million conv. Bonus (4:05 pm Hong Kong)

Chinese developer Country Garden Holdings failed to find enough demand for a potential $ 300 million convertible bond, according to an IFR report.

Morgan Stanley and JP Morgan assessed investor interest, but the deal did not go through, IFR reported, citing people with knowledge of the matter. Country Garden did not immediately respond to a request for comment from Bloomberg. The company’s dollar bond due 2024 fell 4 cents on the dollar to 88.2 cents as of 4:23 p.m. in Hong Kong, according to data compiled by Bloomberg.

China’s Banks Restrict Real Estate Loans to Local Government Businesses (1:40 p.m. HK)

Several of China’s largest banks have become more selective when it comes to financing real estate projects through local government financing vehicles, concerned that some are taking too much risk after they replaced private developers as key buyers of land, people familiar with the matter said.

At least five state banks imposed new restrictions this year on lending to weaker LGFVs and state-owned companies looking to buy land and develop new real estate projects, said the people, who asked not to be identified because it is a private matter. Banks are being stricter in assessing the financial strength of the local economy and the prospects for the sale of projects, the people said.

Evergrande Completes First Production Batch of Hengchi 5 Cars (12:58 PM HK)

Evergrande completed the first production batch of Hengchi 5 electric cars 12 days ahead of schedule, according to a statement on its website. The mass production of Hengchi electric cars is now “on the countdown,” he said.

Sunac Says No More Short-Term Stock Selling Plans (11:46 AM HK)

Sunac China told Bloomberg that it does not plan any more equity market financing anytime soon, after selling $ 580 million in new shares and seeing the shares fall a record 20%.

There is no short-term plan to sell more shares in itself or reduce some of its stake in the Sunac Services unit, the company said.

Shimao proposes to delay full ABS payment (10:51 am HK)

Chinese developer Shimao and Shanghai Shimao Jianshe land unit will meet with investors on Monday to seek approval to extend two ABS payment terms, according to private documents with the Shanghai Stock Exchange seen by Bloomberg News.

Sunac Stocks and Bonds Fall After $ 580 Million Stock Offering (10:55 a.m. HK)

Sunac China Holdings Ltd. shares and bonds fell after the embattled real estate giant raised $ 580 million in an additional share sale to avoid a liquidity crisis.

The nation’s third-largest real estate developer by sales sold 452 million shares at Hong Kong dollars each, a 15% discount from Wednesday’s close in Hong Kong, according to the terms of the deal obtained by Bloomberg News.

The stock placement has done little to restore investor confidence in the company’s long-term financial health, although the funds will be used in part to pay off some loans.

China’s Top Fund Manager Is Buying Developer Dollar Bonds Again (10am HK)

A high-performing Chinese fund manager is buying dollar bonds from the country’s developers after selling them last year, betting that authorities will soon implement more measures to support the sector.

Developer bonds yielding 10% to 20% of the offering value because investors got too pessimistic, according to Deng Sicong, a fund manager at Beijing-based China Asset Management Co. Deng’s fund is the best performing last year among the 25 rated domestic institutional investors. products that give Chinese domestic investors access to overseas securities, according to data compiled by Bloomberg.

Game Theory Suggests China’s HY Investors May Accept Haircut (9:10 AM HK)

Other struggling developers may follow the same tactic as Guangzhou R&F Properties Co. to freely extend or cut a portion of their debt, whether in good or bad faith, Bloomberg Intelligence analyst Andrew Chan wrote in a note. This action should lower investors’ expectations that distressed bonds will trade at par, but at the same time, high-yield bondholders may accept a haircut rather than endure the restructuring.

Yuzhou Group Seeking to Exchange Notes to Avoid Default (7:05 a.m. HK)

Yuzhou Group said it is seeking an exchange of two of its 2022 senior notes as it tries to avoid default.

The company said in a presentation that it is inviting holders of its 6% and 8.625% 2022 senior notes, totaling $ 542 million, to exchange them for new bonds with an extended maturity. Yuzhou said he does not expect to have sufficient funds to pay noteholders who do not agree to the exchange, “which would likely trigger an event of default.”

DaFa Properties Extends Debt Offer Deadline (6:40 am HK)

DaFa Properties Group has extended the expiration deadline for an exchange offer and consent request for 2022 notes to 9.95% by 24 hours until 4 p.m. London time on January 13, according to a statement from the stock exchange. Hong Kong securities.

© 2022 Bloomberg


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